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Consumers “are
willing to take on this debt because there is some increasing degree of
confidence in the economy,” said Ken Mayland,
president of ClearView Economics LLC in Pepper
Pike, Ohio, who projected credit would climb by $15 billion, the highest in
the Bloomberg survey. “Consumers over the past several years have done
a pretty good job of repairing their balance sheets.”

An improving
job market may be giving households the courage to take on more debt in order
to sustain spending, which accounts for about 70 percent of the economy. At
the same time, increasing dependence on credit may be an
indication the gains in employment have yet to push wages high enough
to single- handedly give consumers the means to keep shopping.

Student debt is
looming as a national problem that could have repercussions reminiscent of
the mortgage crisis, says a new report by the National Association of
Consumer Bankruptcy Attorneys.

The study,
released Tuesday and based on a nationwide survey of 860 bankruptcy lawyers,
said that bankruptcy attorneys nationwide are seeing at the ground level
"what feels too much like what they saw before the foreclosure crisis
crashed onto the national scene."

The report
calls for a change in bankruptcy laws.

In the survey,
81 percent of respondents said that potential clients with student loan debt
have increased "significantly" or "somewhat" in the last
four years.

And 95 percent
of respondents reported that few student loan debtors have any chance of
discharging what they owe through a bankruptcy proceeding because they have
to prove "undue hardship" — a standard that is difficult to
meet.

The total debt
from student loans is about $1 trillion, about 14 times more than 15 years
ago and well above the estimated total credit card debt of $798 billion.

...

The report
urges a change in bankruptcy laws so that those burdened with student debt
would be on the same footing as others in debt facing bankruptcy.

"It's not
fair and needs to be corrected," said U.S. Rep. Steve Cohen, D-Tenn.,
sponsor of legislation that would make changes sought in the report.

...

William E.
Brewer Jr., president of the National Association of Consumer Bankruptcy
Attorneys, offered a warning.

"Take it
from those of us on the frontline of economic distress in America," he
said. "This could very well be the next debt bomb for the U.S.
economy."

Michael J. Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes, published by Kaplan Publishing.